Sweetwater Energy will convert crop residues and wood biomass into sugar, which Front Range will ferment into ethanol, according to Sweetwater Energy.
Sweetwater’s press release Wednesday valued the deal at more than $100 million, a figure based on projected sales.
Front Range will pay about $1 million to Sweetwater Energy for its services. Front Range has not estimated the value of the deal to the Windsor company, but Front Range Vice President Dan Sanders Jr. believes it will be “substantial.”
That will depend on the value of the ethanol that Front Range produces with Sweetwater Energy, he added.
Front Range will supplement its use of corn to make ethanol with Sweetwater Energy’s sugar, allowing the company to offset some of the volatility of the corn market, Sanders said. The company aims to gradually use more sugar for ethanol production than corn, which saw record price spikes last year.
Sweetwater Energy will locate a facility near the Front Range site and will deliver enough refined sugar for Front Range to produce as many as 3.6 million gallons of ethanol annually during the initial phase of the companies’ relationship.
Sweetwater Energy’s deal with Front Range follows another $100 million agreement that Sweetwater Energy reached with Stanley, Wisc.-based Ace Ethanol earlier this month.
Sweetwater maintains a patent on technology used to produce low-cost sugar from plants not used for food, including waste materials such as crop residues.
“This process is a major breakthrough for the future of cellulosic ethanol,” Sweetwater Energy COO Jack Baron said.